THURSDAY 3 FEBRUARY 2000

MR MARTYN DAY

  1140. Colleagues, can I welcome you all to this morning's session and especially welcome Mr Day back for a further effort. We do appreciate you coming again. I am sure you understand why we curtailed the previous session. Obviously on the basis of what happened last time can I first of all ask you, in view of the letters received from the tobacco companies, do you now feel able to give evidence to us without being constrained by the undertakings given to those two companies?
  (Mr Day) I do, Chairman.

  1141. No constraints whatsoever so you feel free to say what you have to say. In what ways, other than your previous visit to the Committee, have those undertakings restricted you since the case was dropped?
  (Mr Day) In every way in the sense that I am not allowed to make any comment in any public forum about the information I have received whilst working on the cases over the last six or seven years in relation to anything we have obtained from the defendants in the cases. Indeed, I am not entitled or allowed under the undertakings to make any suggestion that would encourage a campaign against the defendant companies or, indeed, to take any sort of legal action in relation to smoking and health claims. Those are obviously very serious matters in the sense that Irwin Mitchell is the only firm that has the evidence, the information that ever could have taken those actions. In the end they have been very serious constraints.

  1142. Before I ask my next question I think it is worth reflecting for the moment that the Committee were talking obviously about the developments this week in relation to information that has come to light on smuggling in particular, and the alleged involvement of BAT, from whom we have taken evidence on several occasions, and we have agreed this morning to invite those who have presented this evidence and who extracted the evidence from the records and BAT, Mr Broughton, and our colleague, Kenneth Clarke, who of course has written an article this morning in The Guardian alongside your own, which we have read with interest, to come to the Committee to be questioned on these further developments, which do of course have direct relevance to our work. I understand that you may wish to comment on this in your answer to my next question but the information that was in The Guardian and the information that went out on Channel 4 News was constrained very much by the advice received from the lawyers of the two media outlets and there is a good deal more information that is not currently in the public arena which might be of help to us and which should be made available to us in light of our interest in this particular matter. You should be aware of that. Some members of the committee may not have not had the opportunity to read your article this morning in The Guardian, but I wanted to pick up on your point that by lunchtime you say you will be "forced back in purdah". For the time being you are free man to say what you want.
  (Mr Day) This little snapshot of history.

  1143. What I want to say to you is what are the key points you want to put on the record while you are free to do that here without any constraints because which want to hear those points now. Rather than us going ahead with our questions, I think it is important at the outset that you get on the record the points that are relevant to our inquiry that you could not tell us about before and you cannot tell us about after we have finished this morning.
  (Mr Day) I have set out in the written submission some of the points I would like to make. I did want to draw attention to a word processing error in the written submission, if I might start by doing that. At paragraphs 73 and 75 of this there are three quotes for the case that was going on in the United States where I make reference to "British tobacco companies". That should actually have said "defendants". It is referring to the American tobacco companies rather than the British tobacco companies. Where there is any reference in quotes to "British tobacco companies" that should simply be "defendants", if I could clarify that point.

  1144. Thank you very much indeed.
  (Mr Day) I think the crucial thing for me perhaps is two or three different points. I feel that it is a real disaster in many ways in Britain that we were cut off in our court cases from being in a position where we could review all of the documents that were clearly in the archives of the industry. It is only by the whole process being undertaken as it was in the United States that one can start to get anything like a clear and full picture as to what was happening throughout the decades leading up to now from 1950 in the industry. One of the difficulties we have got is that by the time the case came to an end by the end of last year we had only gone through a third to a half of the documents that were due to be disclosed. We had more disclosed but we were in the process of reviewing them which was a massive job with hundreds of thousands if not millions of pages being released, so we were running to try and go through them and put all the pieces of the jigsaw together. The real difficulty is that me and John Pickering from Irwin Mitchell, as the two primary lawyers looking at it, were in the process of piecing the jigsaw together. One of the great difficulties we had at this stage in history is that we were never in a position to put the whole jigsaw together. Indeed, we were getting bits of it and we were trying to make an overall whole. In my view it was a disaster that the case was never allowed to continue through to trial so one could through the proper court process and allow us to put our case and the defendants to defend Clearly any document as an individual document can be read in lots of different ways and you therefore try to make a fair picture of putting the whole thing together. The first thing I would say is that as a result of what has happened in this country as against the States we are probably never going to get a full clear picture of what the industry has been up to over the decades and I think that is a shame for all sides. The tobacco companies protest their innocence and I think a way of proving that is to have all the documents open so people can scrutinise and make their arguments and they can respond. I think that is the proper democratic way of dealing with this whether through a trial or an inquiry such as this or whatever. Obviously an inquiry like this is in great difficulty not having the resources that you have in a legal case to be able to scrutinise document after document. I think what has happened with The Guardian this week shows that if you do force documents or encourage documents to be made available in a public way there are usually people, campaigning groups, media, interested lawyers, who have the time and the energy and interest to go in there and delve around and find out exactly what was going on.

  1145. You are ruling out further court action even if you got somebody other than the judge you got last time. You dropped unlucky, as we established when you were here previously. You do not see there is any purpose in pursuing that course of action further for the reasons you have said. Having understood that point, we are looking at what we as a Committee can do. We are still at the stage of hearing evidence. We have the Secretary of State in front of the Committee next week. How do you see the Committee in its report, how do you see the Government (with, we hope, the will to address the problems caused through smoking) being able to assist in the process that you believe to be very important about extracting that information in the public arena, looking at what is known and addressing the issues which you have very helpfully given in your evidence?
  (Mr Day) I think the greatest thing this Committee can do is in whatever way with whatever powers you have got is to draw out from the industry their documents. I am no expert on Parliamentary process or whatever, but as far as I understand it, you are entitled to subpoena documents and all the rest. I am not sure the extent to which you can do that on the basis that you are never yourselves going to read through them, but if you were in a position that you could extract from the tobacco companies in Britain their archive material or as a starting point the material they clearly put on disk for our court case and that they had clearly scheduled so one would have a ready scheduling system for it, at the very least if that was taken from them and put onto the public record, then I think you would have done a great public service. It may be that you yourselves will not make a big deal of it but by doing that I think it allows other people—maybe there is nothing to be said. Maybe the British tobacco companies have acted absolutely perfectly but it may not be that that is the case. That would be a great public service.

  1146. Did you have an opportunity to study the answers given by the various companies to the Committee last week in answer to my questions and questions from colleagues about their willingness—we are not talking about BAT but other companies to share with the public information that they had on health-related matters?
  (Mr Day) I have not seen that, no.

  1147. You are at a disadvantage because we did have some dialogue about this which is very relevant. With the Secretary of State here next week what do you think the Government could do in this process given a will to address the health problems arising from smoking?
  (Mr Day) I think that there are two sides to it. One is, as I say, the document side whether it comes from you or the Government, which is a crucial part of understanding what has happened historically. The second is what action should be taken here today in terms of smoking. It is the horns of a real dilemma. The two crucial questions in my mind are the issues of the most toxic substance of cigarettes, which is the tar, and, secondly, the nicotine. Forming a view as to exactly what the tobacco companies should be doing now and should have done in the history of all this is difficult. When this health scare came out people politically decided it was not feasible to take tobacco and cigarettes off the market. One is caught on the horns of a dilemma as to exactly what you do. As I say in the paper, my view is that one should be encouraging the idea that the nicotine levels in cigarettes should be gradually reduced down to close to nil. I know that the likes of Martin Jarvis do not agree. They feel the nicotine levels should be kept up and the carcinogenic content should be brought down. I feel if you have to sacrifice a generation in the sense of existing people who are used to their nicotine level and you realise they are going to end up smoking more and do peculiar things they have to do to get their nicotine hit, but if you get your children coming in and smoking the new cigarettes with lower nicotine levels and getting used to that nicotine level and therefore are much more able to quit, I think for me that is a sacrifice worth making. It is a complicated debate. It has been complicated because the scientists themselves have not agreed. From my limited experience purely as a humble lawyer looking at the evidence as an ordinary member of the public, it seems to me that would be the direction I would go in.

  1148. Before I bring some of my colleagues in on specific issues, are there other areas where you feel you want to get your thoughts on the record that you could not last time and you will not be able to later on, areas where you felt constrained in terms of communicating your thoughts and knowledge to the Committee?
  (Mr Day) I think that one of the things looking at the odd picture that I have seen is how industry and government, by and large, work together. I think it has been a crying shame over the last 40 or 50 years that government has played a role that the industry has been able to readily accept. The odd time when you saw the odd Minister pop out of the woodwork, like David Owen in the late 1970s, who had a genuine interest in curbing activities, he was quickly sidelined.

  1149. He joined the SDP!
  (Mr Day) Exactly. Having a Government that is genuinely prepared to be really tough on industry would be of enormous benefit. Clearly one has seen over the last three or four years the difficulty of achieving that in a consistent manner. These are difficult decisions. It is difficult in terms of the direction they could go but I think the smuggling issue in my mind is a very, very key one and there could be a commitment from this Government in the way we have seen in the States to investigate these companies in relation to smuggling. I think the big problem here is that it is international. BAT may well come along and say, "We are not doing anything in Britain. It is nothing to do with us", but in the end often these things are international in their perspective and just as we saw with The Guardian they had to work in an international way with journalists from other countries, it seems to me a commitment by the British Government to work with the other countries in a way to try and stamp out smuggling across the globe would be an enormous commitment to make and an enormous step forward.

  Chairman: Stephen Hesford?

  1150. Good morning. Regulation versus litigation. You say that British and European-based companies do not seem to have been afraid of litigation like their American counterparts. What they do seem to have been afraid of or certainly conscious of is regulation. Can you expand on what the issues are around that?
  (Mr Day) It is not just true of British as against American tobacco companies. I have seen it in lots of other cases that American companies fear generally litigation not regulation and vice versa here. Clearly in the States the thought of having thousands if not hundreds of thousands of claims against you, juries awarding $130 million in two individual cases against all the millions that there are, clearly the financial reality of that is enormous. Yet here the tobacco industry as with many other parts of industry recognise that the judges have been inherently more conservative than an American jury and, by and large, protect their interests. The significance of that in terms of regulation here is my concern as a lawyer is that I feel that we should have a system that encourages and allows the individual to take on the might of industry where they have been injured, but our system here is very discouraging of that and it is encouraging of regulation. As I was saying earlier with regard to government, it seems to me that in an industry like tobacco where you get all the revenues, that there are lots of uncomfortable relationships between government and the tobacco industry which really ignore the dilemma of the individual and the health problems of the individual. I feel that in the end it has worked to our detriment in this country that we have not got a system that is more encouraging of the individual pursuing the tobacco companies.

  1151. One of the frightening features—I do not mean this critically, it is self-evident—or residues of the collapse of the legal case, particularly one of this magnitude, is that there is a prospect that other claimants may never come to court because of a defeat. In terms of the case that your firm took on behalf of the claimant, there were limitation issues and other issues, but are there other aspects of claims which you might have taken into account in terms of having a go at tobacco companies? Your case was basically about tar yields and not reducing them quick enough, putting it in a nutshell.
  (Mr Day) Yes.

  1152. What other aspects are there still outstanding that might be taken into account that would not stymie for all time the prospect of litigation in this country, notwithstanding your comments about the conservative nature of the British judicial system?
  (Mr Day) I find it hard to contemplate there ever being a case again in this country because of our cost system. We talked at one stage to the health authorities about them potentially bringing an action and clearly the health authorities throughout Britain are worth a lot of money. The potential value of the case was something like £10 billion.

  1153. In terms of compensation going to the health authorities?
  (Mr Day) The cost to them of paying for all the health care over the last few years for tobacco related illnesses. The cost to them if they lost would probably be £20 million, a 500 to one chance of gain against potential cost. They clearly decided that this is just not a runner. They could not take the risk of losing £20 million. One knows with tobacco companies they will fight any case with absolute vigour but in an individual case or group of cases like we had or the health authorities might have because of our cost system and because legal aid is almost never going to be available in these sorts of cases, basically unless an enormous white knight comes along on the horizon, a Bill Gates of this world, we are never going to see a case in this country.

  1154. In terms of the question I asked you before about the role of government, do you believe that when the health authorities made that decision, we are talking about some years ago now presumably ?
  (Mr Day) About a year ago.

  1155. So quite recently, do you believe that the health authorities at that stage had a steer from Government on the steps that they should or should not take in respect of this matter?
  (Mr Day) It was very clear that they had a steer from government.

  1156. They were just pursuing the Government line in not getting involved in any action even though they could potentially bring out the amount of money that you have identified?
  (Mr Day) The Government, as far as I understand it, were simply saying that, one, they did not want authorities to go off on their own and if they go they should go as a group, and I absolutely accept that. But, secondly, they were very discouraging of the whole idea. I am not suggesting from my knowledge that they put a total block on it but I think they were very, very discouraging of the whole idea.

  Chairman: It is worth us knowing that in advance of next week, as you will appreciate.

  1157. I can understand or appreciate a health authority or a group of health authorities looking at the consequences of failure and the implications. Would you feel that the benefits of taking that risk would be by the government itself, by the Department of Health?
  (Mr Day) That is clearly possible. It is more difficult with the Government. In the end our system is that it is by and large the health authorities who have the relationship in terms of the health cost. For myself I feel that the risk is absolutely worth it in the sense that one of the potential successes, clearly one would want to review that, would be in terms of the ability to bring everything out into the open in terms of what has gone on, in my view, being the only remaining prospect of that ever happening. Secondly, it is the one way that we will have of ensuring that the tobacco companies are put on trial in terms of what they have done and in terms of the damage that they have caused. For me although I accept absolutely that it is a lot of money, it is not an absolute in the sense that if you start your case and if you feel quite early on that you are getting nowhere, that you have got a Mr Justice Wright on your books as being the judge in charge of your case, you can back off and it might have cost you a million or two. For me it is the only remaining prospect of these cases ever being brought.

  1158. That raises two questions. I am exploring whether there would be some case in view of the potential wider public good for the Department of Health to indemnify any health authority that was prepared to go down the road of taking action. The second one is you seemed to indicate there was a class action on behalf of a particular group of people which you think failed because of the draconian nature of the cost system and the perversity or quirkiness of one particular judge, and that by itself has prevented anybody else taking a class action, a different group of people. Perhaps not in an immediate answer, but would you like to say to the Committee at some stage whether you think there is any message which we as a Committee ought to be giving to the Lord Chancellor in terms of the implications of how the legal system works. The first one is whether there is a case for the Department of Health to indemnify a health authority or health authorities taking a risk?
  (Mr Day) Clearly there is a case for it. Whether the Chancellor of the Exchequer would agree to that is another matter. I do not know enough about the machinations of government at that sort of level, but clearly the sums that we are talking about, albeit large if you are talking about an individual authority are not large if you are talking about the overall group of authorities, not large if you are talking about the overall budget. It seems to me in terms of the scale of damage caused and the impact it could have, the significance of it, whether it is paid for by a group of authorities or indemnified it seems to me a crying shame that they have not felt the strength to actually go ahead with this.

  1159. Can I tease this out a little bit further. Are you suggesting that the health authorities might act on behalf of individuals within their authority or do they have a status of their own in that they have provided expensive services to people who have been harmed by tobacco that in law they could take out a case as an authority?
  (Mr Day) In the United States the individual states, which are basically very similar to our health authorities, took action against the American tobacco companies on the basis that knowing all this damage was going to be caused the American health authorities were caused all this damage, this loss. The American companies settled those cases for $250 billion. We have looked at the case and talked to some of the health authorities and talked to the Confederation and we felt there was a decent case to be put. Those were early days and you would not start off with that and say. "We are definitely going to go ahead", but it seems to me it is well worth the cost of some decent inquiry into the prospect of pursuing that as a starting point. In the end if you were to feel legally it was not strong enough you could drop it.